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21-11-16 12:02

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With a market cap above $2 trillion, it's competition for top tech giants, and just a few days ago, Microsoft surpassed Apple in market value to become the most valuable tech company on the planet.

There's a story that gets told every time Microsoft shares hit new highs.

In 1995, an asset management company named Cascade Investment was quietly established, employing a professional team of nearly 100 people. Over the course of more than two decades, the asset management firm has grown from a wholly owned ritz-Carlton and nearly half of the Four Seasons hotels to the largest owner of farmland in the United States, owning an area the size of Hong Kong. Today, the private asset manager has total assets of more than $70 billion.

At the same time, Cascade Investment also ranks first in terms of return rate in the capital market. Under the leadership of its professional team, the compound annual return rate of stock Investment was 17% in the first ten years of its establishment, exceeding the 6% average return rate of s&p 500 in the same period. It's also had a compound annual return of 11% over 20 years. From 1996 to 2019, Shares of Warren Buffett's Berkshire rose by a compound annual average of just 10.76%. The asset management company's return on capital is as good as the stock market.

Interestingly, the founder behind Cascade Investment, a halo holder with $70 billion in total assets, a 20-year compound annual return that exceeds the stock market, and the largest farmland holder in the United States, is Bill Gates, the former richest man in the world.

If you just look at the numbers, the success of Bill Gates' Cascade Investment is pretty amazing. But what if Bill Gates told you that the money he put into Cascade Investment came from his sale of Microsoft stock?

When Microsoft went public, Bill Gates owned a peak of about 45% of the company's stock. Today, he owns only 1.37%.

Had he not sold his Microsoft shares to start Cascade Investment, they would now be worth more than a trillion dollars, five times the wealth of The world's richest man today.

There are several ways to draw different conclusions to this story, but one of the most undeniable is that most of the investment opportunities in the world are mediocre.

If you go back in time to 2000, would you invest in Coca-Cola or Google or Apple?

You can also explain, in many ways, how a consumer goods company has survived, how Coca-Cola has survived for a hundred years, and even how Coca-Cola has created value for society.

Of course, I don't think that high-sugar carbonated drinks have created more value for society than Google and Apple, but that doesn't make me think that Coca-Cola is one of the greatest business companies in the world. But even those investment opportunities are mediocre compared to the returns of top tech companies.

In today's VC circles, the same story is still playing out.

The rate of return is absolutely correct

We are long-term, Patient investors. We "ve been investing in crypto assets for 5+ years. We've never sold any of those investments, and dont plan to any time soon. We structured the a16z crypto fund to be able to hold investments for 10+ years.

As investors, we are long-term and patient. We have over 5 years of experience investing in crypto. We've never sold any of our investments, and we won't anytime soon. A16z this crypto fund, is to hold the investment, get more than 10 years.)

This is what A16Z wrote in 2018 when he founded A16Z Crypto, a venture fund specifically for the crypto industry. This is a venture capital firm with absolute name recognition in Internet technology, investing in the top apps on the screen, Instagram, Oculus VR, etc. They were also one of the first to officially invest in crypto, with a $350 million Crypto Phase II fund and a $2.2 billion Crypto Phase III fund.

One of A16Z's investments is Coinbase, the U.S. -listed cryptocurrency exchange that caused a stir in the Internet industry. Coinbase is the first trading platform in the industry to be listed on Nasdaq.

A16Z first invested in Coinbase in 2013, paying $1 a share. Subsequently, it participated in series C and E financing. In addition, A16Z has made multiple off-market purchases of Coinbase shares from Union Square Ventures, buying 3.52 million shares for about $87.1 million.

A16Z's stake in COIN is worth about $9.7 billion and is fully tradable, according to Coinbase's ipo filing. A16Z sold more than 6 million shares of COIN on May 21 and May 24 for nearly $1.4 billion in cash, public records show. According to A16Z's website, it has completed the exit of its Coinbase investment, which may mean that A16Z has sold its shares.

Of course, we can't calculate the total purchase cost and selling range of A16Z, but according to public filings, THE net profit of A16Z's investment in Coinbase will exceed $7 billion.

$7 billion may not be enough to make the horror of the crypto industry feel. In the past years, A16Z disclosed 38 investments in the field of Crypto on its official website. BlockBeats summarized these arrangements based on publicly available data and found that these projects raised a total of $2.512 billion in rounds involving A16Z (excluding projects with undisclosed amounts).

That means A16Z's gains on Coinbase alone cover all of crypto's costs.

Now, as bitcoin continues to hit new highs, valuations of all projects are rising. In the field of crypto, issuing Token financing is more common than equity financing. Most crypto projects are sold to investment institutions by issuing tokens, and the yield of tokens is even better than that of stocks. Coinbase is A16Z's only publicly disclosed crypto exit, which means A16Z's returns are still increasing.

In September 2018, A16Z purchased $15 million MKR, which is now valued at about $171 million and has a return of about 1040%. It is worth noting that the deal came from an open secondary purchase rather than an early investment. OpenSea, an NFT trading platform led by A16Z in series A and B trading, now has more than $50 million in daily trading volume and more than $1.25 million in daily net revenue, which translates to more than $400 million in annual net profit. Currently, OpenSea has no plans to issue tokens or go public, but based on its profitability, A16Z could earn as much on this investment as it did on Coinbase. Dapper Labs, the strongest team in the NFT field, A16Z has also invested in 6 rounds and is now valued at $7.5 billion. You would argue that these returns are overblown, but if you had bought bitcoin in April 2019, you would have had a 16.5x return today.

For VCS, yield equals infallibility.

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A week ago, Sequoia Capital, a top investment firm, announced that it was abandoning The traditional 10-year cycle theory of venture capital and changing its name to The Sequoia Fund. "We want to make a lasting impact, not just for 10 years," Sequoia said, "just like the best founders in the world."

Behind this shift in the Sequoia narrative is a more important detail that is hardly noted. While announcing the abandonment of the 10-year cycle theory as investment support, Sequoia applied to the US Securities and Exchange Commission to transform into a registered investment advisor (RIA), making investment more flexible, can use more money in crypto, commodities and other fields.

This means that Sequoia, as one of the world's top venture capital institutions, also began to use more money in crypto, which was once criticized as useless innovation.

After noodle shops, tea drinks and other so-called new consumption are frantically pursued by those top investment institutions, it seems that consumer goods are the assets that can bring them great returns. A bowl of noodles, a cup of tea, these things that are never likely to change our life in any way, become the target of THE VC chase. Since for VC, the rate of return is their most important index, but they most despise crypto field, the rate of return has already exceeded other industries. A16Z's numbers and Sequoia's announcement speak for themselves. Investing in one Coinbase is like investing in 100 consumer products.

VC should be a very romantic and idealistic career, as Chen Yuetan said in her article "Spark Prediction 2021".

We've invested in companies that will build chips and the future of humanity out of sand. We've invested in companies that will put computers on every desk in every home. We've invested in companies that will enable every color and language in the world to communicate with each other in real time.

A VC is someone who keeps the world open to change. Prometheus brings fire, VC is supposed to be the bearer of it.